Up 15% This Year, Is Costco Stock a Buy?

Core Viewpoint - Costco's stock has significantly outperformed the market in 2026, with a year-to-date increase of approximately 15%, reflecting investor confidence in its consistent growth capabilities in various market conditions [3][4]. Sales Performance - Costco reported a 9.3% year-over-year increase in sales for January, driven by a 7.1% rise in same-store sales, which excludes the effects of gasoline prices and foreign exchange fluctuations [6]. - Adjusted same-store sales growth accelerated to 6.4% year-over-year, up from 6.2% in December, indicating robust sales momentum despite potential weather-related impacts [7]. - Digitally enabled sales, which account for 10% of overall revenue, surged by 33.1% year-over-year in January, a significant increase from 18.3% growth in December, showcasing the effectiveness of Costco's digital engagement strategies [8][9]. Historical Sales Growth - Sales growth has remained strong over the past few years, with fiscal year sales increasing by 7%, 5%, and 8% in 2023, 2024, and 2025, respectively, despite challenging comparisons to the high growth rates during the COVID-19 pandemic [10]. Valuation Concerns - Despite Costco's strong business performance, concerns about its current valuation arise, with a price-to-earnings ratio of 53, which implies expectations of 15% annual earnings-per-share growth, while actual growth was only 10% in fiscal 2025 [11][12][13]. - The high valuation presents a risk of potential re-rating, suggesting that even a well-performing business can face valuation risks if the stock price is deemed excessive [12].